Mullen Automotive Inc (NASDAQ:MULN) announced it has filed a ‘spoofing’ complaint against UBS Securities, IMC Financial Markets and Clear Street Markets, alleging the broker-dealers engaged in a market manipulation scheme of its shares by using spoofing.
The electric vehicle manufacturer filed the complaint in the District Court for the Southern District of New York, noting that spoofing claims based on similar conduct have garnered judicial successes in recent years.
The US Securities and Exchange Commission describes Spoofing as “the submission and cancellation of buy and sell orders without the intention to trade in order to manipulate other traders,” Mullen said in a regulatory filing.
The company claimed the defendants used spoofing, an unlawful trading device, to devalue the market price of its shares between November 9, 2021 and November 9, 2023.
During that period, it said they placed thousands of spoofing orders to sell to create the illusion that its share price was declining. These orders were intended to “trick” or “bait” other investors into selling their shares which further drove Mullen’s share price downward.
Mullen said it withdrew a previous lawsuit filed on August 29, 2023, against certain broker-dealers that it claimed were short-selling its stock as the case covered a limited period of three months and did not provide it with a sufficient opportunity to justify the cost that would be incurred in pursuing the claims in that litigation.
Following a cost-benefit analysis of both cases, it concluded that it would be a prudent exercise of business judgment to pursue the larger spoofing litigation rather than the short-selling litigation.
“My focus continues to provide transparency and to protect the long-term value for our Company and our stockholders,” the company’s CEO and chairman David Michery said in a statement.
“We believe that the spoofing litigation provides the best opportunity to sustain our claims as well as recover damages based on the defendant’s market manipulation.”
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